Friday, 25 August 2017

The government owned mini-ratna MSTC Ltd is planning to launch forward trading in the horticulture products sector to support its recently launched nationwide electronic portal - eRaKAM.

The online trading platform which primarily deals in food grains,
vegetables, fruits, spices and all agriculture related commodities and
connected farmers directly with consumers, is all set to launch forward trading in pineapple and mango among
a number of other such commodities to make the platform successful.
Union Food Minister Ram Vilas Paswan, had last week said that around 2
million tonnes of pulses procured by the Food Corporation of India
(FCI), would be auctioned on eRaKAM to begin with.

MSTC, however, does not feel the need to get regulatory approval for launching forward trading as
it is proposing it in the horticulture commodities speciallly
perishable commodities which are not traded in futures segment.
Securities and Exchange Board of India (Sebi) had suspended such forward trading in January 2016.

"There is a normal practice in remote Indian villages to sell entire mango fruits
for the season in an orchard at the time of flowering. This practice is
prevalent since ages without any regulatory approval. If we are
allowing mango / pineapple farmers
to know their realisation at the time of flowering, farmers would be
encouraged to take care of their fruits better. It is better, if farmers
find buyers well ahead of harvesting of their products to reduce
spoilage, as horticulture is a product with short shelf life. For
cereals, however, forward contracts may not be needed due to their long
shelf life. Meanwhile, MSTC is just a platform and not trading in any commodity," said B B Singh, chairman and managing director, MSTC.

Through its home grown technology, MSTC is
engaged in the e-auctions of cereals, sandalwood, land parcels, teak
wood and other such products on behalf of the state and central
governments through its own e-portal.

It's newly launched electronic commodity trading platform eRaKAM,
however, is dedicated to farmers in the Northeast who would be able to
sell their commodities to the highest bidders across the country and
fetch higher price.

The launch of eRaKAM has raised eyebrows as a similar government
project — electronic National Agricultural Mandi (eNAM) — launched by
the Small Farmers Agribusiness Consortium (SFAC) in April 2016, failed
to attract adequate liquidity despite having connected with around 500
agricultural spot mandis across the country.

Meanwhile, moving in tandem with the electronic trade wave, India Farmers Fertiliser Cooperative (Iffco) has introduced Iffco Bazar,
an online marketplace (online mandi) for farmers wherein they can buy
and sell their products to farmers located anywhere across the country.
Through this, Iffco aims to connect and bring on board all the 50 million IFFCO member farmers and the 36,000 cooperatives in the country on a single digital platform.

Existing private player in this business NCDEX eMarkets
Ltd (NeML) has, however, gained handsome traction from traders
especially in Karnataka where its parent National Commodity &
Derivates Ltd (NCDEX) has modernised spot mandis.

News published in Business Standard | Kolkata | Thursday, 24 August 2017